(Reuters) – GMAC and CIT Group (CIT.N), which converted to bank holding companies to qualify for U.S. government funds, have been unable to issue government-backed debt as regulators have yet to approve their applications, the Financial Times reported.
Both lenders confirmed to the paper that their applications were still pending at the Federal Deposit Insurance Corporation (FDIC). The agency does not comment on specific applications.
The delay in getting FDIC approval is tightening the liquidity squeeze at both companies, hurting their ability to lend, the paper said.
GMAC, part-owned by private equity group Cerberus, and CIT converted to bank holding companies more than three months ago to access government equity infusions under the U.S. Treasury’s $700 billion bailout fund and also to be able to issue cheap debt backed by the FDIC.
In a report on its website, the Financial Times said GMAC was responding to requests for extra information from the FDIC, but the agency did not indicate when it would decide to approve applications. (Reporting by Vikram S Subhedar in Bangalore, Editing by Ian Geoghegan)